Location: Morrison County, MN | Metro: Mille Lacs County, MN HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $930 |
| 1 Bedroom | $1,040 |
| 2 Bedrooms | $1,330 |
| 3 Bedrooms | $1,830 |
| 4 Bedrooms | $1,940 |
| 5 Bedrooms | $2,250 |
| 6 Bedrooms | $2,520 |
| 7 Bedrooms | $2,722 |
| 8 Bedrooms | $2,858 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,330 | $346,385 | 0.38% | F |
| 3BR | $1,830 | $424,291 | 0.43% | F |
| 4BR | $1,940 | $483,896 | 0.4% | F |
U.S. Census Bureau data (2024)
The classification of ZIP code 56338 (Hillman, MN) on the axes of yield and stability reveals a nuanced picture for landlords and small-portfolio investors. On the yield axis, the Fair Market Rent (FMR) for FY 2024 is set at $1130, which stands significantly higher than the local market rent of $675. This suggests a potential opportunity to increase rental rates closer to the FMR, thereby enhancing yield. However, the median home value in the area is $366,141, indicating that the initial investment required to enter this market is relatively high.
Moving to the stability axis, the percentage of renters in the area is quite low at 4.7%, which might pose challenges in terms of finding tenants. The lack of data on days on market (DOM) makes it difficult to assess how quickly properties can be leased once they become vacant. Additionally, the average household income is $70,938, which provides some assurance that residents have the financial capacity to meet their rent obligations. However, the low renter population could still lead to periods of vacancy, impacting overall stability.
Given these figures, ZIP 56338 leans towards being a steady-cashflow zone rather than a high-yield/low-stability flip-style market. The potential to raise rents to the FMR level offers a higher yield compared to the current market conditions. Yet, the low renter population and the high median home value suggest that this area is less prone to rapid appreciation and flipping opportunities. Instead, it supports a strategy focused on maintaining a consistent tenant base and achieving stable cash flows over time. Landlords should consider these factors carefully when deciding whether to invest in this ZIP code.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.